Vehicle Insurance Only Kicks in With Proof of Payment, Supreme Court Rules

Ruling issued in case of motorcycle driver who was seriously injured while riding the bike after speaking to an agent, but before paying the premium.

An insurance policy is not valid until the premium has been paid and the certificate of insurance has the stamp to prove it, the Supreme Court ruled last week.

The judgment was issued in the case of a customer by the name of David Mor who bought a motorcycle from a friend and was seriously injured while riding the bike just hours later.

Before the accident, Mor and his friend contacted an insurance agent about obtaining coverage for Mor, but the agent said the policy could not be issued until title to the bike was transferred to Mor. The pair then went to the post office, transferred the ownership and returned to the insurance agent, who issued a certificate of insurance in Mor's name.

Mor then sought to pay for the insurance premium at the nearby post office branch, but decided not to wait because the post office was crowded. The accident occurred several hours later, without Mor paying the premium.

When suit was filed on the matter, the district court ruled that Mor's insurance was in force at the time of the accident. The court said the law only required that the premium on a policy, once issued, be paid within a reasonable period of time. The district court awarded Mor NIS 1.8 million plus attorney's fees against the insurance company.

The insurance company appealed the judgment to the Supreme Court, claiming that the motor vehicle insurance law clearly required insurance premiums to be paid and evidence of payment stamped on the certificate of insurance before a policy takes effect.

Justice Noam Sohlberg, writing the majority opinion, said that until Mor fulfilled the necessary conditions the policy documents remained just a proposal for insurance rather than actual coverage. Sohlberg did suggest, however, that the company consider going beyond the letter of the law and pay Mor 35% of the amount of the district court judgment.

Shiran Granot